Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance.
The finance industry in its most common sense concerns national banks and large commercial banks who provide market liquidity, risk instruments, and brokerage for large public companies and multinational corporations at a macroeconomic scale that impacts domestic politics and foreign relations. The extragovernmental clout and scale of the finance industry remains an ongoing controversy in many industrialized Western economies, as seen in the American Occupy Wall Street civil protest movement of 2011.
Styles of financial institution include credit union, bank, savings and loan association, trust company, building society, brokerage firm, payment processor, many types of broker, and some government-sponsored enterprise.
Financial services include accountancy, investment banking, investment management, and personal asset management.
Financial products include insurance, credit cards, mortgage loans, and pension funds.
History
The term "financial services" became more prevalent in the United States partly as a result of the GrammLeachBliley Act of the late 1990s, which enabled different types of companies operating in the U.S. financial services industry at that time to merge.
Companies usually have two distinct approaches to this new type of business. One approach would be a bank that simply buys an insurance company or an investment bank, keeps the original brands of the acquired firm, and adds the acquisition to its holding company simply to diversify its earnings. Outside the U.S. (e.g. Japan), non-financial services companies are permitted within the holding company. In this scenario, each company still looks independent and has its own customers, etc. In the other style, a bank would simply create its own insurance division or brokerage division and attempt to sell those products to its own existing customers, with incentives for combining all things with one company.
Relationship to the government
The financial sector is traditionally among those to receive government support in times of widespread economic crisis. Such bailouts, however, enjoy less public support than those for other industries.
Banks
Commercial banking services
A commercial bank is what is commonly referred to as simply a bank. The term "commercial" is used to distinguish it from an investment bank, a type of financial services entity which instead of lending money directly to a business, helps businesses raise money from other firms in the form of bonds (debt) or share capital (equity).
The primary operations of commercial banks include: Keeping money safe while also allowing withdrawals when needed Issuance of chequebooks so that bills can be paid and other kinds of payments can be delivered by the post Provide personal loans, commercial loans, and mortgage loans (typically loans to purchase a home, property or business) Issuance of credit cards, processing of credit card transactions and billing Issuance of debit cards for use as a substitute for cheques Allow financial transactions at branches or by using automatic teller machines (ATMs) Provide wire transfers of funds and electronic fund transfers between banks Facilitation of standing orders and direct debits, so payments for bills can be made automatically Provide overdraft agreements for the temporary advancement of the bank's own money to meet the monthly spending commitments of a customer in their current account. Provide internet banking system to facilitate customers to view and operate their respective accounts through the internet. Provide charge card advances of the bank's own money for customers wishing to settle credit advances monthly. Provide a check guaranteed by the bank itself and prepaid by the customer, such as a cashier's check or certified check. Notary service for financial and other documents Accepting deposits from customers and providing credit facilities to them. Sell investment products like mutual funds Etc. The United States is the largest location for commercial banking services.